Law Review SMASHING THE BROKEN MIRROR: THE BATTLE OF THE FORMS, UCC 2-207, AND LOUISIANA'S IMPROVEMENTS Smashing &heBroken ,Mirror: The Battle of the Forms, UGC 2-207, and Louisirasrra% Improvements TABLE OF CONTENTS I. introduction.. ......................................................... 11. The Mirror Image Rule and the Last Shot Principle ... 111. Formation of Contracts in Louisiana-Presenm1 and Future ........................ .. ....................................... IT. UCC Section 2-28'? Problems and Civil Code Solutions ............................................................. A. Where Acceptance is ""Expressly Conditional". ..... I. The Meaning of ""Expressly Conditional" ...... 2. Article 260 l -Omission of '"Expresslyq'-Ap- parent Disadvantages ................................... 3. Article 2681 -Omission of ""Expressly"- Advantages ............................ .. ............. B. Expression of Acceptance ............................... ... C. Additional and Different Terms as Proposals for Modification .................................................... D. Additional Terms that ""Materially Alter9' the Contract ....................... ................................. 1. ""Different Terms" and Acceptance by Silence 2. ""Materially Alter" ...*............... ............... 3. Is it the Offer, or is it the Contract, that is . Materially Altered"? ................................ E. Where the Offer Limits Acceptance to the Terans of the Offer .................................................... I. Ambiguity of Offer-Reskrictioras in WCC Sub- sections 2-207(a) a11d (c) Abolished ............... 2. Reduction in Redundancy ............................ 3. Article 2601---Asymnnetry in Use of Term ""Expressly9'................... ... ....................... Copyright 1993, by LOUISIANALAW REVEW. * LL.M. (international business law) 1992. University of London-Ring's Co!lepe London; 9.D. 1991, Paul M. Webert Law Center, Louisiana State University; M.S. electrical engineering 1990, B.S.E.E. 1987, Louisiana State University. The author is an associate in the energy section and internationd iaw practice group in the Houston office of Jackson & Walker, B,.L.P. 1556 LOUISIANA LAW REVIEW [Vol. 53 F. Confirmations ................................................ B 573 G. Bra1 Versus Written 6Zommunications-Inconsisten- cies and Ambigilities.. ....................................... 1574 V. Conclusion ................... .. ..................................... 1575 While a broken mirror is supposed to bring seven years of bad luck, the breaking of the common law's mirror image rule1 by section 2-287 of the Uniform Commercial Code has been seen in a more positive light. The UCC abolished the mirror image rule because it is problematic and can lead to unjust result^.^ In Louisiana, where the UGC has not been completely adopted, the mirror irnage rule, as embodied by Louisiana Civil Code article 1943,3 has recently been eliminated as Effective January 1, 1995, Article 1943 will be superceded by New Louisiana Civil Code articles 2601 and 2602, which closely follow the structure of UCC section 2-207. Articles 2601 and 2602 were part of the Sales Revision Projet of the Louisiana Stale Law Institute, and are designed such that some of the defects of section 2-207, which have become apparent over time, may be avoided. To the extent that these articles accomplish this goal, they are a "new and improved" versi~nof section 2-207, and can be a guide for further rnlodification of section 2- 207. To that end, this paper will examine Louisiana's solutions to some of section 2-2049's proble~ns.~ 1. See Part 11, infra. 2. See 1 Salil Eitvinoff, Obligations 5 186, in 6 Louisiana Civil Law Treatise (1969), and Consent Revisited, 47 La. L. Rev. 699, 736-39 (1987). 3. See infra note 7 and accompanying text. 4. 1993 La. Acts 841, 5 1, 5 4. 5. In making suggestions concerning legislation, I am not unaware of the problems inherent in making law by legislation (as opposed to common law or judge-made law, or even privately produced law). As noted by the late Italian legal theorist Bruno Leoni in his Freedom and the Law (3d ed., Liberty Fund 1991) (1961), "there is more than an analogy between the market economy and a judiciary or lawyers' law, just as there is nluch nlore than an analogy between a p!anned economjl and legislation." Id. at 23 (emphasis in original). The knowledge of legislators (and of commentators, as well) about the society they will affect by their actions is, like that of central planners, severely limited. Because of illis ignorance, all the effects of a given legisiated law cannot be predicted. In the same way that a centrally-planned economy is inefficient, centrally-planned laws (i.e., legislation) are also problematic. Therefore, both the efficacy and legitimacy of legislation are uncritically taken for granted in today's society. Of course the problems inherent in legislation are also inherent in making suggestions for legislation, such as the comments in this paper. Neverthe- less, where the choice is between legislators passing this law or that law, I do not hesitate to recommend the better of the two, for having judge- or market-produced law is simply not an option today. LOUIS424NA'S BATIFLE OF THE FORMS 11. 'THE MIRRORIMAGE RULE AND TED3 LAST SHOT PRINCIPLE &Jnder the mirror image rule, a purported acceptance which does not perfectly ""mirror" the terms sf the offer is not an acceptaxlce; instead, it is a rejection and counteroffer. An ostensible acceptance of this coun- teroffer may, by the same token, be instead a counter-~oalnteroffer~The true acceptance occurs when a party finally starts performing, after re- ceiving the latest counteroffer of the other party. By the performer's acceptance, the contract embodies the terms of the last counteroffer. 1x1 this way the mirror image rule Ieads to the last shoe principle: he who makes the Bast offer (i.e., the 6'last shotP9)before perfcermaa~ce/ acceptance has his terms locked into the contract. As White and Summers slate, The original draftsman of 2-207 designed it (though not exclu- sively) to keep rhe welsher in the contract. He had cases like Puel v. Ba-unswick-Balke-CoIkender Co.E6] in mind. There the buy- er's uardelling sent back its own order form which happened to coincide with the seller's terms except in one rninor respect. It sdded: "The acceptance of this order . in any event you must promptly acknow8edge." Thereafter, the seller failed to acknowl- edge, and the buyer for other reasons backed out. When the seller sued the buyer, the court held that the buyer's order form did not constitute an acceptance. At comnnon law an acceptance had to be a mirror image of the offer. The buyer's form therefore could not be an acceptance; it was a counteroffer. The rigidity of the common Iaw rule ignored the modern realities of commerce. Where preprinted forms are used to structure deals, they rarely mirror each other, yet the parties usually assume they have a binding coxltract and act accordingly. Section 2-207 rejects the common law mirror image rule and converts many common law counteroffers into acceptanlces under 2-207(1).7 The last shot principle was largely elimi~matedby the enactment of tJCC section 2-207. Some vestiges of the last shot principle have, however, escaped total elianinatioa~;~also, the applicdion of section 2-207 is not without u~icertainty.~Section 2-2137 is not yet perfect. 6. 110 N.E. 619, 621 (N.Y. 1915). 7, .lames J. White & Robert S. Summers, Uniform Comnlercial Code 29-30 (3d ed. 1988) (footnotes omitted). 8. See inb note 21 and accompanying text. 9. See, e.g., Richard W. Duesenberg, Contract Creation: The Contirzuing Struggle with Addibionol and Dgferent Terms Under Uniform Commercial Code Section 2-207, 34 Bus. Law. 1477 (1379), for a discussio~~of some uncertainties created by UCC P 2-207. 1558 LOUISIANA LAW REVIEW [Vol. 53 Louisiana's mirror image rule-present Louisiana Civil Code article 1943-reads: "'An acceptance not in accordance with the terms of the offer is deemed to be a counteroffer." Louisiana courts have been able, En some cases, to avoid the inequities of such a rule by holding that an acceptance with different terms is really ""sbstantially" an acceptance. For example, if a buyer offers to purchase something at $1000, and he seller "accepts" but at a price of $800, this is an acceptance-even though the terms do not mirror those In the offer-because the seller has changed a term in the buyer's fmor.'O However, except in a similarly limited and rare situation, a court would be largely unable to prevent unjust outcomes resulting from application of current 1,ouisiana Civil Code article 1943, because the mirror image reale it prescribes ineltactably leads to the Hash shot principle. Under new Articles 2601 and 2602, the mirror image rule is repealed in favor of a provision similar to section 2-207 of the UCC. New Article 2604, which corresponds to UCC subsections 2 %07(B) and (21, reads as follows: Art. 2601. Additional terms in acceptance of offer to sell a movable An expressiol~of acseptamce of an offer to sell a movable thing suffices to form a contract of sale if there is ;agreement on the thing and the price, even though the acceptance corrtainns terms additional to, or different from, the ternas of the offer, unlless acceptarace is made conditional on the offeror's acceptance of the additional or different terms. Where the acceptance is not so conditioned, the additiond or different terms are regarded as proposais for modification and must be accepted by the offeror in order to become a part of the contract. Befvdeen merchants, however, additional terms become part of the contract unless they alter the offer mberially, or the offer expressly limits the acceptarlce to the terms of the offer, or the offeree is raotified of the offeror's objection to the additional terms within a reasonable time., in a11 of which cases the additio~lal lcrms do not become a part of the contract. Additional terrns alter the offer materially when their nature is such that it must be presumed that the offeror would not have contracted on those terms.